2018 (3) TMI 348 - AT - Central Excise

Classification of goods - spent catalyst - whether classified under CETH 2620.00 of the CETA, 1985 or otherwise? - Held that - it has been consistent view of Apex Court that spent catalysts cannot be considered to be a result of manufacturing process and thus there cannot be any liability under Central Excise on spent catalysts - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confirmation of demand of Central Excise duty, interest, and penalty under Section 11AC read with Rule 25(1) of the Central Excise Rules, 2004.
2. Classification of spent Palladium Catalyst under the Central Excise Tariff Act, 1985.

Issue 1:
The appellant appealed against the confirmation of demand of Central Excise duty, interest, and penalty under Section 11AC read with Rule 25(1) of the Central Excise Rules, 2004. The appellant, engaged in the manufacture of bulk drugs, used Palladium Charcoal Catalyst imported from the UK in their manufacturing process. The duty was demanded, classifying the spent catalyst under Heading 2620.00 of the Central Excise Tariff Act, 1985, and chargeable at 16% Adv. The appellant argued that the spent catalyst is not a marketable commodity and relied on various decisions to support their stance, including the case of Astra IDL, Kusum Products, and others. They contended that the spent catalyst should not be classified under Chapter 26 but under Chapter Heading 3815. The appellant also highlighted that the show cause notice did not specify the heading under which the revenue sought to classify the spent catalysts.

Issue 2:
The main contention revolved around the classification of the spent Palladium Catalyst under the Central Excise Tariff Act, 1985. The appellant relied on the decision of the Tribunal in the case of Astra IDL, which was affirmed by the Apex Court, emphasizing that the spent catalyst is not a marketable commodity. The Tribunal's decision in the case of Kusum Products was also cited, where spent nickel catalyst was held not to be manufactured and, therefore, not excisable. Furthermore, the appellant referred to the decision of Nirma Ltd., highlighting that spent catalysts cannot be considered a result of the manufacturing process, thus absolving them from liability under Central Excise. The appellant's arguments were supported by various legal provisions, including Chapter Note 3(a) and Chapter Note 1.(f) of Chapter 26 of the Central Excise Tariff Act, to establish that the spent Palladium Catalyst should not be classified under Chapter 26.

In conclusion, the judgment addressed the issues of confirming demand of Central Excise duty, interest, and penalty, as well as the classification of the spent Palladium Catalyst under the Central Excise Tariff Act, 1985. The appellant's arguments were centered on the non-marketability of the spent catalyst and its classification under a different heading. The legal analysis involved referencing previous decisions, Tribunal rulings, and specific provisions of the Central Excise Tariff Act to support their contentions. The judgment provided a detailed examination of the legal aspects involved in the case, ultimately leading to the resolution of the issues raised by the appellant.